DFJ Vinhos: Wines in China, A promising but difficult market

Case Study: Wines in China – A promising but difficult market
“Selling wine is like selling dreams; you have to tell the right story to the right customer”
Engº José Neiva Correia
With 1.3 billion potential customers and a forecast of 39,62% growth in wine consumption
from 2012 to 2016, China seems like a market that no wine producer or exporter can afford to
ignore [exhibit 1]. Moreover, this impressive growth is potentially sustainable long-term, since
it has until now been concentrated in consumers under 40.
Starting in April 2013, José Neiva Correia, CEO of DFJ Vinhos, motivated by this potential,
presided over a series of meetings with the purpose of determining the company’s strategy for
expansion in China. DFJ Vinhos had already occasionally exported through small regional
importers in China. However, the new ambitious goal under discussion was the placement of
15% of its capacity in the Chinese market within the next two years. Although the potential of
the rising Chinese middle class seems unlimited, during their strategy discussions the DFJ
Vinhos team also has to navigate many obstacles in the path to success: the fragmented and
competitive nature of the Chinese market, the challenging cultural expectations of the Chinese
consumer, and the weak Portuguese brand image.
With the beginning of the season for the biggest wine events in China starting in September,
the team has only a few weeks to decide whether it is worthwhile to invest money and
resources on a well orchestrated campaign to place their higher end wines in the market. Or
should they trust in a lower end and high turnover strategy, which wouldn’t need such an
intensive investment and commitment? Or is the best approach a balanced mix of these
strategies? Cracking the Chinese market could decisively shape the company’s future. Its
complexities and challenges, however, make deciding on a strategy to gain a foothold there a
demanding puzzle.
DFJ Vinhos – “The New Portugal”
José Neiva Correia and the company’s team
José Neiva Correia CEO, owner, winemaker of DFJ Vinhos, and consultant, was born into a
Portuguese family which has been involved in winemaking for several generations. He has
now a demanding company to run and owns, along with his seven brothers, one of the biggest
agricultural estates of Estremadura, which also has 200 hectares of vineyards.
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